Energy company Powergen has fired another salvo in the sector's growing price war after announcing plans to cut prices for six million domestic customers.
The company said the move would make it cheaper than British Gas for electricity, gas and dual fuel customers.
Powergen is cutting gas bills by 16% and electricity bills by 5% but said the lower prices will not come into force until April 30.
Powergen is the second company to announce lower prices since British Gas first unveiled lower prices at the beginning of February, with rival firm npower following suit last week.
Powergen, which is part of the E.ON group, said the average bill for a dual fuel customer buying both electricity and gas would fall from £1,005 to £913.
The cut makes it £40 cheaper than the £953 announced by British Gas three weeks ago - although British Gas will introduce its new price more than six weeks sooner, on March 12.
Powergen's move also matches German-owned npower's decision to cut gas bills by 16%, but its 5% cut in electricity prices goes further than npower, which said that average electricity bills would fall 3% from April 30.
The company's announcement follows the firm's recent launch of three products guaranteed to be cheaper than British Gas until September 2008, although these were only made available to new customers.
Powergen managing director Nick Horler said: "We've been very aware of the concerns of our customers over rising energy costs in recent years and now the wholesale market appears more stable, we're pleased to be able to reduce our prices."
British Gas kicked off the price war on February 8 after revealing 17% cuts in gas prices and 11% reductions in electricity bills - its first price cuts in seven years. Other power companies such as Scottish and Southern Energy and Scottish Power are also expected to enter the fray with their own price cuts shortly.
